4 thoughts on “Episode 419: Interception with Ed Miller”

1. Nice interview. It would have been interesting to hear more of Ed’s views on what the industry is likely to do to plug its current leak of failing to spot disguised betting patterns. Once customers can no longer sneak even a few strong value bets through on softer markets, by also betting a reasonable amount on harder markets (such as ‘NFL – team to win game’) it’s basically game over and it feels like we are almost at that stage already. The last sportsbook I worked for restricted customers to max stakes of 50 cents after they had placed just a single potential arbitrage bet (where they could lock in a profit by also laying the bet on Betfair) and that was over ten years ago.

   Your only chance of making real money with sports betting is to become a successful exchanges trader. If you are going to put the considerable work in required to do that, you may as well focus on financial markets as there is a lot more liquidity in those markets and the small-time investor can still find niches. However, the good days are long behind us in just about every area of investing.

   Back in the Old West, it was often remarked that the only guy doing really well out of gold prospecting was the one selling shovels. I imagine Ed believes this still to be true and regards his future book sales as his most-likely source of serious income. Nothing wrong with that, nor with quitting the game to coach poker. Teaching people to at least lose more-slowly is a noble calling, these days!

   • Thanks for the comment, Hank! Very interesting, especially the bit about the book banning players for a single potential arbitrage. As for selling shovels, my understanding is Ed’s primary business is the software/algorithms (not sure the right term here) that helps books set lines for in-play betting.

     • Thanks Andrew. They wouldn’t even wait to find out if the customer had just just picked out an arb spot without realising it, because there was so little chance of this happening by coincidence. I would estimate that 80% of the traders’daily work involved dealing with arb bettors, who would constantly create new accounts in different names. Most weren’t that bright. You would get a ‘supposed’ 19 year-old Lithuanian girl opening an account and trying to back a horse in an Irish low-class hurdle race at odds of about 2.2 – with a £200 first bet (her entire deposit, paid with Skrill). An unlikely long-term recreational customer, to say the least.

       I guess Ed’s primary role isn’t selling shovels then. He’s helping the landowners to constantly adjust the prices of the remaining properties on offer to prospectors, based on what is being discovered in the mines close by and minimising the chance that the prospector stumbles across a rich vein at a bargain price. Of course, it soon ends up with most of the miners giving up or going broke, but there will always be new dreams to sell – perhaps more than just dreams if you can get in early enough.

2. Ed is also right in saying that sportsbooks have to protect themselves from winning players, even those who start with small stakes. If you deposit $100 and (to minimise risk of ruin) make 50 bets per day (each bet being 2% of your roll) turning a 5% profit every day, then your roll will be around $5.4 billion after just 365 days. This sounds crazy, but it is very similar to an individual going bankrupt because of a small debt with daily compound interest.

   For example (roll at end of each day)…

   Jan 1: $105.00
   Jan 2: $110.25
   Jan 3: $115.76
   Jan 4: $121.55
   Jan 5: $127.62
   Jan 6: $134.00
   Jan 7: $140.71

   You would be more than doubling your roll every 15 days – 24 times in a calendar year. Of course, even if you were allowed to bet unrestricted it is extremely unlikely this would happen but it would not take many unchecked value bettors to bring the company to its knees in a very short time and there are a lot of winning value bettors out there.

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